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Mike Donovan has had the entrepreneurial spirit ever since he became a self-made 11-year-old.
"I wanted a set of golf clubs,” he remembered, “so my dad took me out to the garage and pushed the lawnmower down the driveway, saying ‘That’s how you are going to buy your golf clubs.’”
From there, he built a business mowing 40 yards a week.
“By the time I was 15 years old I had amassed quite a little empire,” Donovan added. “That’s what propelled me to be an entrepreneur. At that moment in time, when I had to earn a set of golf clubs, it became contagious.”
His dad’s lesson and that winning mindset has helped Donovan, co-owner and president of HTS Texas, an independent manufacturers’ rep firm based in Houston, drive the company onward and upward from virtually a start-up with a half a million dollars in revenue to a $118 million in revenue by 2014.
“The value of service that we want to provide means we have to become much bigger than just an extension of the manufacturer in the market place,” Donovan explained. “If we want to succeed in rapid succession, we have to have a long width of mechanical HVAC equipment, we have to be in the service and parts business long after a customer has received the equipment, and we have to be in the building controls business.”
The company first caught our eye when it was named last August in Houston Business Journal’s "Fast 100 List" at No. 74. The ranking recognizes the fastest-growing companies headquartered in the Houston area based on revenue growth from 2012 to 2014. (The company also made the list in 2010 and 2014.)
The accolades for fast growth, however, extended nationally this year, too. Inc. magazine ranked HTS Texas at No. 2434 to its "Inc. 5000," a ranking of the country’s fastest-growing private, entrepreneurial-class of businesses. In its ranking, the magazine noted the company’s three-year sales growth of 154 percent.
What’s more, the company’s Parts Departments received several Daikin Group Awards for top sales and part distributors at a 2015 parts meeting. The Dallas, Fort Worth, Austin, Houston and San Antonio parts departments each received Daikin’s Century Club Award for exceeding sales goals for the year. Dallas reached 120 percent of its sales quota, and San Antonio reached 141 percent. Both offices also received the Parts Division President’s Award, and the Houston office received the Parts Division Pinnacle Award.
And if that weren’t enough to put the company on our radar, Donovan himself has complied an enviable list of personal leadership awards. For example, he’s 2009, 2010 and 2015 Ernst & Young "Entrepreneur of the Year" finalist, and his company bio continues with paragraphs worth of additional sales and leadership awards.
Not bad for a guy who’s barely into his 40s.
Plan in place
Donovan put a plan in place almost from his first day on the job that has helped the company become what it is today.
A guiding principle to growing the business is to take a big picture view of design.
“We really wanted to have system experts that had engineering degrees from universities to help the design community and the owner community solve problems and design our products into a system, not design systems into a product,” he added. “That was really a big point of emphasis for our investment and infrastructure drive.”
Related to this guiding principle, Donovan said that what sets the company apart is technical expertise.
“Almost all of our sales leaders or employees who interface with clients have engineering degrees,” Donovan explained. “It's just a prerequisite that you have some sort of technical degree. We hire people who have an engineering degree because they have perseverance, determination and problem-solving skills. That's who we want to be our sales leaders and the face of our company.”
Finally, and maybe not surprisingly given the lesson learned as a boy, Donovan prizes autonomy in his staff.
“The customers really lean on us to be the technical experts,” he explained. “The notion of checking with the factory to solve a problem is not something that I tolerate or want to hear from our sales people when they're talking to customers. They need to know their product, the way it's applied, and how to service it inside and out. I want all that local knowledge here and documented.”
Donovan credits much of the company’s success with his staff’s ability to quickly solve customer problems.
“If they have to wait for a factory to answer their questions, that's just more time away from a costumer having a comfortable building, air conditioning or heating. We need to be able to solve it in stride, and fast. We need that knowledge here so that way we have technical capability here at all of our offices,” he said.
Take a look at what the company’s doing to help promote VRF technology. HTS Texas has an exclusive relationship with Daikin for commercial and industrial equipment across the state. With other lines comes a unique product: what Daikin calls variable refrigeration volume (VRV/VRF) air-conditioning. Variable refrigerant flow (VRF) technology moves refrigerant throughout a building to provide individual climate control in each zone while maximizing energy savings.
In 2007, HTS Texas started Direct Expansion Solutions (DXS), a sister company to design and sell VRV, but maybe more importantly, to educate the industry on VRF technology and to serve as local experts. As a result, DXS built “VRF technology labs” in all of HTS Texas’ offices. The labs allow not only employees but also architects, contractors and engineers from other companies to experience designing, installing and starting up VRF equipment. Also, HTS Texas launched an airside products group representing Twin City Fan and Krueger-HVAC and also an online store offering a catalog of HVAC products.
The company launched a FIT Building Division two years ago to transform facility operations by managing technology and maximizing a building’s performance. Associated software and analytics give building managers the ability to aggregate their energy usage data into a single central database.
Additional accomplishments include the opening of offices, warehouses and parts stores in new markets while other offices have gone through expansions and relocations. Currently, the company operates offices in Austin, San Antonio, Houston, Fort Worth, Dallas, Beaumont with parts stores and distribution warehouses in Round Rock, San Antonio, Houston, Fort Worth and Dallas.
Today, HTS Texas operates six divisions including custom equipment, parts, service, building automation, airside products and fit building. These divisions enable the company to offer a one-stop shop for clients staffed by local industry experts.
Donovan first came to HTS Texas about a year after it first started. While HTS Texas opened its doors in 2001, its corporate parent can trace its heritage back to its first location in Toronto in 1992. HTS went on to open other offices prior to expanding into Texas. Today HTS operates 16 locations in Canada and the U.S. with nearly 500 employees representing more than 80 HVAC suppliers.
Donovan graduated from Texas A&M with a chemical engineering degree in 1996. While he said there were plenty of opportunities for him, that 11-year-old kid who built a lawn mowing empire was never too far away. He purposefully narrowed the focus of his job search to sales jobs and also consulting.
“I wanted a scenario where I got paid by my own performance,” he explained. “That's really what I was looking for out of university. Either be an entrepreneur immediately or work in a role that had a heavily laden component of performance metric to it. I was not bashful about that when I was interviewing.”
He eventually worked for six years as a sales engineer at York International, but was always upfront about wanting a role in a business of his own. That opportunity came in 2002 right around the time the company acquired the McQuay line, now known as Daikin, for central Texas and proceeded to open offices in Austin and San Antonio.
Donovan said he has a plan for future growth for the decades ahead, too.
“We continue to bring a different value to what we do than most,” Donovan explained. “From our clients’ perspective, it's technical expertise and it's flexibility in terms of conditions compared with what can be offered by some of our corporate competitors. We're much more flexible in the ways we conduct business with them in the terms and conditions of sale.”
After considering what else might be unique selling point, Donovan added empowerment.
“Empowerment is probably the biggest thing we offer to our clients,” he said. “Our sales staff can just take care of the issues. They don't need to bring them back to several layers of management and to make concessions on projects. They just take care of them. They're intended to make the best decision for themselves and the company together. It's a conjointly motivated scenario.”